- A comprehensive analysis of the economy of Pakistan Super League
Cricket in Pakistan isn’t just a sport; it’s a passion that runs deep within the veins of millions. From bustling streets to tranquil villages, the love for cricket transcends boundaries, uniting people from all walks of life. In this cricket-crazed nation, the Pakistan Super League (PSL) emerges as a beacon of hope and excitement, offering fans a thrilling spectacle of T20 cricket while also serving as a catalyst for economic growth and development. At the heart of the PSL’s economic framework lies its innovative franchise model, a system that has revolutionized the cricketing landscape in Pakistan and opened up new avenues for investment, entrepreneurship, and prosperity.
The seventh edition of the HBL Pakistan Super League (PSL) tournament is expected to create huge income opportunities for franchises, enrich the country’s global perception and address international security concerns. HBL PSL has 80 million viewers who have turned the Twenty20 cricket series into a major success. The tournament also draws significant corporate sponsorships from multinational firms and has led to a steady increase in the income of franchises.
Genesis of PSL:
The Pakistan Super League, launched in 2016, represents a watershed moment in the history of Pakistani cricket. Conceived as a means to revive the sport in the country and provide a platform for local talent to showcase their skills, the PSL quickly captured the imagination of cricket enthusiasts worldwide. However, beyond its sporting objectives, the PSL also aimed to leverage the potential of the franchise model to drive economic growth and sustainability.
The Franchise Model:
At the core of the PSL’s economic structure is its franchise model. Similar to other successful T20 leagues like the Indian Premier League (IPL) and Australia’s Big Bash League (BBL), the PSL franchise system operates on the principle of ownership. Six franchises, each representing a different city within Pakistan, were auctioned off to private investors, who then assumed responsibility for managing and promoting their respective teams. This decentralization of ownership not only diversified investment opportunities but also fostered a sense of regional pride and identity among fans.
Broadcasters are the first component of PSL’s business model. They are responsible for broadcasting the league on television. The PSL is broadcast on various TV channels, which pay the PCB for the broadcasting rights. For the 2021-2023 period, the PCB sold the broadcasting rights to two channels, A-Sports, and PTV Sports, for 24 million dollars (approximately Pakistani 638 crore). The revenue generated from the sale of broadcasting rights goes to the PCB.
The second component of PSL’s business model is sponsors. There are two types of sponsors: title sponsors and official sponsors. Title sponsors pay a considerable amount of money to have their name attached to the league’s name. For example, the HBL PSL, where HBL is the title sponsor. HBL paid 14.3 million dollars (approximately Pakistani 380 crore rupees) to renew their contract with the PSL in 2021, of which the PCB retains 5%, and the rest goes to the franchises.
The third component of PSL’s business model is team owners. The PSL has six teams, and the winning team receives 12 crore Pakistani rupees. However, team ownership is not cheap. In 2018, the Multan Sultans were sold for 42.6 million dollars (approximately Pakistani 1100 crore rupees). Team owners also earn revenue from merchandise sales, ticket sales, and sponsorships.
Official sponsors pay the PCB to have their brand promoted in various ways, such as on billboards and stickers around the ground, and through promotions during the matches. For example, the “Golootlo Catch of the Match” is an official sponsor. In addition, the PCB earns revenue from advertisements during matches. For the 2023 PSL matches, a 10-second ad will cost 1.5 million Pakistani rupees (approximately 15 lakh Pakistani rupees).
Revenue Streams:
Central to the success of any franchise-based league is its ability to generate revenue. The PSL achieves this through a diverse range of streams, including broadcasting rights, sponsorship deals, ticket sales, merchandise, and licensing agreements. Broadcasting rights, in particular, represent a significant portion of the league’s income, with television networks competing fiercely for the rights to broadcast live matches to millions of viewers around the globe. The influx of sponsorship deals from corporate entities eager to capitalize on the league’s popularity further bolsters the PSL’s financial standing, providing franchises with the necessary resources to invest in player recruitment, team operations, and promotional activities.
The financial model is that 95% of the total revenue is distributed among franchisees and only five percent comes to the PCB after all expenses. Under the agreed model, PSL franchises will also be entitled to an additional 98% percent share of the profit from the central revenue pool as COVID-19 relief for PSL-5 and PSL-6. Previously, they were getting about 85 to 90 percent of the revenue.
The major sources of revenue generation for the event are advertisements, airing rights auctions, and title sponsorship.
The PCB has auctioned the PSL TV Broadcast media rights for 2022-2023 for over Rs4.35 billion – or approximately $24.6 million – which were awarded to a consortium comprising ARY and state-owned Pakistan Television (PTV). Title sponsorship is another revenue generation source which is retained by the country’s largest bank, Habib Bank Limited (HBL), until 2025. HBL not only exceeded the reserve price in reacquiring the rights but sealed it with a 55 percent jump from the last cycle, which speaks volumes of their belief in the PSL brand. Though the official amount of the title sponsorship is not disclosed, media reports claim it stands at $22.2 million, up from the $14.5 million that were signed for 2019-2021 events.
The two main sources of income for the PCB (Pakistan Cricket Board) are:
- The title sponsor
- The broadcaster
Title sponsors pay a lot of money to be associated with PSL, and PCB has received millions of dollars from them to link their names with PSL. In addition to the title sponsor, broadcasters pay PCB for the rights to broadcast PSL matches on their channels, and PCB has earned a significant amount of revenue from them.
PSL teams are owned by private companies or individuals who buy teams and earn money from sponsorships and ticket sales. The responsibility of conducting PSL rests with PCB, which also earns money from official sponsors of PSL and the battery race. The battery race is an event organized during PSL matches, and PCB earns 300 crores from it.
The PSL business model has been influenced by the success of the Indian Premier League (IPL) in India. Like the IPL, PSL is also a franchise-based league that aims to promote cricket and provide opportunities for young players to showcase their skills.
One of the unique features of PSL is that it is held in the United Arab Emirates (UAE) due to the non-availability of international team time in Pakistan. The league has faced security concerns in the past, and hosting it in UAE has ensured the safety of players and spectators.
Sponsorship and Branding:
Sponsorship and branding play a crucial role in the economic ecosystem of the PSL. By partnering with corporate entities, franchises secure significant financial backing, which is then reinvested into various aspects of the team’s operations. In addition to financial support, sponsors also provide valuable marketing opportunities, allowing franchises to enhance their visibility and reach a wider audience. The branding of franchises through logos, colors, and merchandise further strengthens the connection between fans and teams, fostering a sense of loyalty and engagement that transcends the boundaries of the cricket field.
Player Auctions and Salaries:
One of the most intriguing aspects of the PSL’s economic model is the recruitment of players through auctions. Each year, franchises bid for the services of domestic and international cricketers, with the highest bidder securing the player’s contract. This competitive bidding process not only injects excitement into the league but also drives up player salaries, ensuring that top-tier talent is handsomely rewarded for their contributions. The influx of international players adds to the league’s global appeal, attracting fans from around the world and further enhancing its economic viability.
Local Development and Grassroots Initiatives:
While the PSL undoubtedly attracts star players from around the world, it remains committed to nurturing local talent and fostering grassroots development. Franchises invest in academies and training programs aimed at identifying and nurturing young cricketers, thereby ensuring a sustainable pipeline of talent for the national team. Furthermore, initiatives such as talent hunts and school-level competitions help democratize access to the sport and unearth future stars, thereby enriching the cricketing landscape of Pakistan.
Economic Impact:
Beyond its immediate financial implications, the PSL exerts a significant economic impact on Pakistan as a whole. The league stimulates tourism, as fans flock to host cities to witness matches firsthand, thereby boosting local economies through spending on accommodation, dining, and transportation. Moreover, the influx of international players and media coverage enhances Pakistan’s global visibility, potentially attracting foreign investment and fostering cultural exchange. Additionally, the PSL provides employment opportunities for a wide range of individuals, including players, coaches, support staff, and event organizers, thereby contributing to job creation and economic growth.
Challenges and Opportunities:
Despite its undeniable success, the PSL faces its fair share of challenges. From security concerns to logistical hurdles, organizing a high-profile cricket league in Pakistan is no small feat. However, with each passing season, the league continues to evolve and adapt, leveraging technology and innovation to overcome obstacles and deliver a world-class sporting spectacle. Looking ahead, the future of the PSL appears bright, with ample opportunities for growth and expansion. As cricket’s popularity continues to soar, particularly in emerging markets, the league is well-positioned to capitalize on this trend and cement its status as one of the premier T20 competitions in the world.
Conclusion:
In conclusion, the Pakistan Super League represents more than just a cricket tournament; it embodies the spirit of enterprise and innovation, as evidenced by its pioneering franchise model. By marrying sporting prowess with economic acumen, the PSL has not only transformed the landscape of Pakistani cricket but has also emerged as a beacon of hope and prosperity for fans and investors alike. As the league enters its next chapter, one thing remains certain: the economies of PSL and its franchising are as captivating as the cricket itself, promising a future filled with excitement, growth, and success.
The author, Mr. Nazir Ahmed Shaikh, is a freelance writer, columnist, blogger and motivational speaker. He writes articles on diversified topics. Mr. Shaikh can be contacted at nazir_shaikh86@hotmail.com.